Bitcoin vs Gold: Which Is the Better Hedge?

Throughout the contemporary world, there is a huge need to find a safe haven to store money. This is due to aspects such as inflation, bad government policies, bad economy and the fear of losing money. Hedge is a thing that individuals utilize in order to safeguard their money or investments against value decrease. It is simple like this, a hedge is to ensure that you have a secure pocket even during bad economic times. Bitcoin and Gold are two trendy things people use as a hedge. The two compare in terms of features, and benefits as well as dangers. In this write-up, I will discuss what Bitcoin and Gold are, their differences and which one is best when it comes to the purpose of hedging particularly someone like me who lives in Nigeria.

Gold dates back thousands of years ago. It is a gloved yellow metal and one which people have always adored. Gold is precious, pretty and even jewelry, coins, and some electronic components can be made of it. However, other than that, a large number of individuals store value using gold. This implies that when individuals fear the possibility that their money may decrease in value caused by inflation or poor economy, they rush to gold. This is attributed to the fact that gold is not easily lost in value. As a matter of fact, gold is perceived to be a symbol of wealth in most of the countries. Even the government, as well as banks, maintain gold as a means of safeguarding their economy. Over a long duration of time, the gold has been the primary hedge against inflation and financial troubles.

Bitcoin by contrast, is extremely new when compared to gold. It began back in 2009. Bitcoin can not be held physically, such as gold. It is an online currency and its existence is only on the web. Somebody (or some group of people) developed it under the name of Satoshi Nakamoto. Bitcoin operates by a technology referred to as blockchain. This is highly safe and cannot be hacked easily. Being a currency that is not facilitated by the government or any bank is one of the reasons why Bitcoin gained popularity. This implies that no person is able to print extra Bitcoin as governments are able to print extra money. There are only 21 million Bitcoins ever to be created. Due to this, several individuals assume that Bitcoin is an efficient mode of value storage and money security.

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All right, it is time to compare gold and Bitcoin against each other as to the property of being a hedge. To begin with we have to discuss stability. Gold is extremely stable. Its price can (and will) occasionally rise and fall a little, but not too much. An example here is whereby you obtain a gold today and when you examine the value the following week or next year, the difference would not be big. The latter renders gold a safe investment destination. Bitcoin is not like this. Its value may increase and decrease at a very rapid pace. To illustrate an example, a 1 Bitcoin can be worth $50,000 today, but tomorrow it can fall to 30,000 or even make a ladder to 60,000. Such a behavior of the price is referred to as volatility. Therefore, gold can be an optimum investment choice in case an individual desires to have a hedge on their cash with restricted risk. However, when a person does not mind making a small danger and maybe a larger amount of income, then it is possible to turn to Bitcoins.

The other thing that will be considered is liquidity. Selling ability or changing something to cash is known as liquidity. Gold is extremely liquid. Wherever you are in the world you can go to the market and sell gold. Gold sells very easily even here in Nigeria. Bitcoin, too but not the same way, is also liquid. You require internet, a bitcoin wallet and you have to wait until the transaction is confirmed. Not all people in the country Nigeria comprehend Bitcoin and some fear it. In this regard, therefore, gold still enjoys the upper hand in liquidity.

We might also speak about security. Gold is tangible and hence the possibility of its theft precedes it especially in case it gets to your home. Storing it in the bank means you are likely to incur costs of storage, or you must concern yourself with access. Bitcoin is virtual and hence not subject to loss through robbery. However, once someone hacks your wallet or you lose your password then you might lose your entire Bitcoin permanently. Therefore both gold and Bitcoin have security threats. This is dependent on the level of care given by the individual. At that, both men are equal though in not quite equal ways.

Accessibility is another thing. Buying Bitcoin through a phone and the internet is very simple. As a matter of fact, today, in Nigeria, almost every person has access to the apps, such as Binance, Paxful, and Bundle to be able to purchase and sell Bitcoin. You do not have to lug anything physical. It is possible to purchase even small fractions such as 5 000 or 10 000 naira of Bitcoin. It is not that simple with gold. You have to visit a gold dealer or jeweler and buying small quantities is not simple. Therefore Bitcoin can be more open to those who wish to begin on a low scale with a gradual expansion of the hedge whereas gold can be a tricky investment option.

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The history of gold is one of the strongest reasons put forward by this metal argument. Reliance on gold has existed for thousands of years. It has stood up wars, inflation and economic crashes. Gold is known and trusted by everybody. Gold was regarded as the wealth and prosperity even in the Bible. The long history does not stretch back to bitcoin. It is quite new, and we cannot even predict what you should expect to happen in 10-20 years. Therefore, when a person is seeking something that has been tried and approved, gold comes out as the winner.

However, growth potential is one of the most powerful arguments of Bitcoin. Although, Bitcoin is risky, it has increased very rapidly within a short time. Case in point, as of 2010, a single Bitcoin cost less than 1 US dollar. Nowadays, it is worth thousands of dollars. Such can not be the growth of gold. Gold is a slow-growing metal. Hence, Bitcoin, to a person who is not averse to risking, could serve a person with greater returns as compared to gold.

Ok, now we can bring this down to Nigeria. The Nigerian economy has lacked stability over the past years. The naira is continually depreciating. There are high levels of inflation. Most of the population does not have confidence in the banks and the cost of goods continues to inflate. When it comes to such a situation, we Nigerians have to find a secure means to store our money. Gold is good as it cannot go wrong, it is stable and trusted. But it is costly to purchase and stock. Bitcoin is cheaper to purchase and when the cryptocurrency price increases then you can get more money. However, the price could also collapse any moment without any warning and you might lose money.

Secondly, the Nigerian government has been not much accommodative to cryptocurrencies such as Bitcoin. Even the banks were not allowed to assist the crypto traders in the past. The fear is, albeit not currently strong, accompanied by the fact that the ban is not that strong. This causes fear among individuals to invest in Bitcoin. Conversely, there is no ban on gold. It comes under the law and it is acceptable. Gold is therefore safer with regards to government policy.

Nevertheless, not all the young Nigerians are scared. They are going to the internet, teach themselves on Bitcoin, and invest. The reason is that they would like to evade inflation and to take control of their finances. Bitcoin makes that freedom available to them. You cannot just allow the government to get their hands out and access your bitcoin without taking precaution. Bitcoin has become the latest method of saving and increasing money among the young people in Nigeria.

However, gold is still preferred by older people and by people who desire less risk. It is something they could feel, see and comprehend. They are more confident with it. Hence, the decision to use Bitcoin or gold varies on the type of individual, the age factor, knowledge and risk capacity.

Summing up, Bitcoin and Gold have advantages and disadvantages. Gold is solid, reliable and well-established. It is a powerful insurance particularly to those individuals who are concerned with risk avoidance. Although it is not simple to purchase small scales, without hazard. Bitcoin is emerging, speedy and it can rise to the top. It is very convenient to purchase and have stored at your phone, but it also can depreciate very quickly as well. In my case as a Nigerian, I think both Bitcoin and Gold are useful. I will split it up in case I have a lot of money. I will invest some in gold and some in Bitcoin.

Therefore, it is good to find out about gold and Bitcoin, which can save the day of the Nigerians who have to deal with inflation, currency devaluation, and an unstable economy. Do not place all of your eggs in a basket. Learn to read first, begin little, be cautious. This is one of the ways of securing your money and developing intelligently. Both Bitcoin and gold are gifts and only the wise will know how to make good use of them.